What is Input Tax Credit in GST? How to get GST Refund?

Input Tax Credit (ITC) is Goods & Services Tax (GST) paid or payable by a registered person on the purchases or expenses incurred for the business activities.

Even though you have not paid any amount to your supplier, you can still claim the credit & get refund from the Customs Department.

For example, an hypermarket or superstore will normally have 3-6 months terms with their suppliers, they can claim the credit or even ask for refund from Customs Department after just receiving the tax invoices from their suppliers.

Criteria To Claim Input Tax Credit

No

Criteria To Claim Input Tax Credit (ITC)

Compliance Status

1

You must be a registered person, that’s taxable person.

Yes

2

The goods or services must have been acquired in the course or furtherance of the business (means for business purposes).ITC is claimable on acquisition of capital assets used in the business (such as equipment, furniture, etc)

Yes

3

Goods or services are acquired for making taxable supplies (standard-rated or zero-rated supplies)

Yes

4

It must not be subject to any restriction such as blocked input tax items

Yes

5

You must hold a valid tax invoice or valid customs importation documents

Yes

6

Tax invoices must be in the name of the registered person unless simplified tax invoices are used.

1. How to start prepare GST for your company?2. How to charge GST to your customers?3. How to get GST refund from Kastam?4. How to avoid GST penalty?5. Be careful of time bomb in GST Malaysia6. Top 10 most asked questions for GSM Malaysia

Basic concept of GSTScope of GSTWhat are Goods & Services?What is Supply?What is Deemed Supply?What is Zero-Rated Supply?What is Exempt Supply?What is NOT a supply?What is Input Tax Credit?What is Blocked Input Tax Credit?Who cannot claim Input Tax Credit?What is Tax Invoice?What is Consideration?What is 6 months rule?What is 21 days rule?

The Royal Malaysian Customs will continually update its interpretation, guides & rulings. No one shall act upon any views expressed here without seeking professional advice.

Comments from NBC Personnel, Staff, Management or Directors are merely for reference purposes and DO NOT constitute as Ideas, Advices or Suggestions from NBC Professional Group or its personnels, you are advised to engage GST Consultants for all your GST Matters.